Flight of FDI

Sitting in his Leader of Opposition, Rajya Sabha chamber, Arun Jaitley would frequently lament how capital was flying out of India due to the faulty policies of the corrupt UPA government. Many a journalist covering Parliament and the BJP then would recall this commentary of our present day Finance Minister.

Jaitley now virtually heads a pro-market pro-business government with Prime Minister Narendra Modi globe-trotting asking anyone listening to invest in India, Make in India. This comes after a year of Modi going round the world beseeching investors to pump moolah into the Indian economy, and Jaitely defying his party diktat to perpetuate FDI in retail trade sector opened up by the Manmohan Singh government. Remember how the BJP hit the streets with its traditional constituency the petty shopkeeper, to oppose FDI in retail sector? What of that now? Jaitely said the choice has been left to the states. Public memory may be short but even then the UPA government had announced that under the Constitution the states are fully empowered to allow or prevent the opening of retail showrooms of foreign brands. So what’s new in Jaitley’s expansive gesture, except following the dotted lines of UPA diktat?

And yet the Indian Express, 4 June, 2015 reports that FDI in India declined by 40 per cent, year-on-year to US $ 2.11 billion in March, 2015, the lowest in last four months of 2014-15 fiscal. The paper reports that the FDI in India was at 3.53 billion in March, 2014 under UPA regime. But by November, 2014 (Modi-Jaitely regime) it touched all-time low of US $ 1.53 billion. In that sense there is a slight improvement but what an improvement?

All that seems to be growing from the distrust, the business world harbours against the bombastic claims of Modi-Jaitley duo and their fan club of “Achhe Din” in the face of obvious falsification and manipulation of data to hike up the GDP which is currently under World Bank probe.

In January the Central Statistics Office (CSO), using a “New method,” said that India’s real or “inflation adjusted” GDP in 2013-14 grew by 6.9% instead of the earlier estimated 4.7% and 5.1% in the year before, compared to 4.5% in the earlier system, Taking that as the base the GDP for 2014-2015 was projected as 7.3 per cent.

Drawing his inspiration from these falsified and manipulated figures, in his Budget speech Finance Minister Jaitely predicted on February 28 this year a growth rate of 8.5 per cent. But yesterday Reserve Bank of India (RBI) Governor Raghurman Rajan poured cold water on Modi-Jaitley’s hurrah by predicting that the GDP may be pegged one per cent lower at 7.6.

Same is the story with inflation. In mid-April the CSO proudly announced inflation coming down to 5.1 per cent, a record downward trend. But then these claims were thrown out of the window by none other than Bharatiya Mazdoor Sangh (BMS, an RSS affiliate) general secretary B N Rai who told Labour minister Bandaru Dattatraya to ask his wife the actual prices of items of daily consumption, mocking his own government in the face. The fact is that from the pulses, to milk, to vegetables, fruits and what you will, you name it and every item of daily use has gone up. Of course in the current Sanghi dispensation it is sinful to even talk of meat, fish, chicken and eggs, and so the sinner “Mansahaaris, Vaibhacharis” ought to at least pay more if not altogether banished from the surface of the earth. Just to give an instance, green peas are essentially a Winter crop and by Spring time it is sold dirt cheap. In March 2014 Safal retail outlet sold it for Rs 20 a kilo. In March 2015 the same Safal outlet in Gulmohar Park was selling it at Rs 40 a kilio, registering a 100 per cent increase and we are to celebrate the CSO figures about inflation coming down.

The RBI governor has predicted a reversal here too saying that it will go upto 6 per cent.

Let alone reports of US economy recovering and major capital flying across Atlantic on that account, does any of this inspire any confidence in any investor? That explains the 40 per cent fall of FDI in India and Modi says we will beat China.